Small, local businesses are the critical backbone for regional economies. They create employment for local residents, offer management opportunities that lift employees into the middle class and are more resilient to economic shocks than sole proprietorships that employ less than 4 people. Unfortunately, according to the two reports, The Survey of Texas Hispanic- Owned Businesses with Paid Employeescompleted by the Business of Bureau Research in 2012-2013 most minority-owned businesses struggle scaling their businesses from sole proprietorship to businesses creating significant employment and advancement opportunities.
The challenges experienced by Aguascalientes are not unlike those of small businesses across the country. From 2016-2019, IC² and the City of Austin explored reasons for the lack of growth among small businesses, developed and implemented a training program calledFASTForward, that addressed specific small business needs. From interviews with over 50 companies in Travis County and 33 company participants in the FASTForwardprogram, we learned that small businesses in Central Texas generally lack several key elements that would promote growth including:
- Business strategy to organize marketing, sales, fundraising and operational growth activities;
- Peer and business mentor networks to expand introductions to new customers and wisdom to solve business challenges as they grow;
- Outside talent to support skills required to address challenges and take advantage of opportunities; and
- Motivation to do things differently in order to find and engage new customers to support business growth.
In 2016 ,the IC² Institute and the City of Austinbrought together Austin small-business owners for a 10-week training course based on the IC² Institute’s successful methods of accelerating small business in the US, Latin America, Europe, and Asia. Participants produced an actionable business strategy, engaged in peer and community business mentor networking sessions, and worked with University of Texas students to address the business challenges they identified.FASTForwardaimed to create a business accelerator program that reflected the diversity of Austin, and just not add another program supporting the white and male-dominated technology sector. Indeed, this approach succeeded to engage diverse businesses, with 67% of the businesses participating owned by womenand 45% were minority-led. Through our analyses of participating companies, we learned that many began as sole-proprietorships, but after program completion, many were able to grow adding on average more than two employees to their company payroll. Some key results of the program include:
- Addition on average of 2.5 new jobs per participating company;
- Introduction of new products by >70% participating companies;
- Expansion of customer base by >90% of participating companies;
- Growth in annualized revenue by participating companies by & 40% on average;
- Use of workshop-taught methodologies at least once a week by & 55% participating companies; and
- Realization of >$1MM in annualized revenue by several participating companies.
One of the most successful businesses that came through the FASTForwardis now a familiar brand in Texas. Kirsten Fields, founder of Mmmpanada, was a member of the first cohort in 2016 and came to IC2 with the goal of getting her product in the freezer aisle of major grocery stores. Kirsten said that the FASTForwardprogram allowedher to “take a step back” from the day-to-day grind in order to grow herbusiness. She developed the vocabulary to discuss her business effectively and the discipline to focus on her goals. In 2018 Kristen’s dedicationpaid off for Mmmpanadaas the company won HEB’s Quest for Texas Best taking home the top $25,000 prize, abrand new Toyota Tundra, and (most importantly) shelf space in HEB stores.
The business press loves to cover success stories aboutentrepreneurs who have raised 7-figure rounds of funds from venture capital funds or who have scaled their companyintomulti-million-dollarventures through an accelerator program. Meanwhile, most small businesses are left to solve their problems by themselves. In Austin, we pride ourselves on diversity and having a “small business culture” but a 2019 survey of Austin’s business community by IC2suggests that there is little support to elevate small businesses through mentorship, education and actionable business strategy.
This problem is particularly acute in the face of the COVID-19 pandemic. Since March, we have seen large numbers of small businesses ranging from caterers to gyms to retail outlets struggle to survive. According to a study by the University of Houston Hobby School of Public Affairs and the Austin Chamber of Commerce, “more than 25 businesses in the surveyed population within which more than a third of the businesses were of the opinion that under the current conditions their business would not be able to last more than 4 months.”(Hobby School of Public Affairs, 2019, p.39)
There has been some Federal aid for small businesses, but the loose definition of “small business” by the Small Business Association allows any business with less than 500 employees per location to file for the same loans as small businesses with a staff of two. The average minority-owned business in Texas has 10 employees (BBR)and is left competing with much larger firms for the federal funds to keep their businesses afloat (SBO data from 2007, BBR report pg 11). As consumers, we must show how important small business are to our communities by consistently buying from them providing resources to maintain business amid a pandemic driven economic crisis.
When businesses develop a strategy to grow and local resident support them growth occurs. This is the experience of FASTForward . University towns are unique because each day new thoughts are being created by forward thinkers.Universities provide a commonplace, a network, and an energy to their community but what they need to do is take their influence a step further and work for the community rather than within it. If Universities share their expertise with members of the small business community and provide tools to succeed in this precarious economic climate, the entire community is lifted up. Here at IC2, we aim to launch another round of FASTForwardto train the business community of West Texas in collaboration with Truist Bank. We aim to tackle their boom and bust cycle in order to create sustainable success by allowing small businesses to expand and solidify the core of the region’s business ecosystem. By training business owners we can elevate the community and therefore enact actionable change.